Shorts: Autumn Budget Overview

8th December 2025

The Autumn Budget Statement is one of the most anticipated events in the UK’s financial calendar, shaping the economic landscape for individuals and businesses alike.

This year’s Budget, delivered by Chancellor Rachel Reeves, focuses on balancing fiscal responsibility with targeted support during a period of economic uncertainty. Shorts Tax Partner Craig Walker breaks down the key announcements and what they mean for you individually, and your business.

Autumn Budget: Key Facts

The Chancellor delivered her Autumn Budget Statement on 26 November 2025, outlining measures aimed at balancing fiscal responsibility with cost-of-living support. The headline figure is a £26 billion package of tax-raising measures, alongside targeted relief for households.

Key themes include:

• Tax freezes extended: Income Tax thresholds and the personal allowance remain frozen until April 2031.
• Tax increases ahead: Property, dividend, and savings income tax rates will rise over the next two years.
• Cost-of-living support: Energy bills cut by an average of £150 per year, rail fares frozen, and the two-child benefit cap removed.
• New levies: A surcharge on homes valued above £2 million and an electric vehicle mileage-based road tax from 2028.
• Business incentives: A new 40% first-year allowance for capital expenditure and expanded reliefs for investment schemes.

Autumn Budget Statement: Key Takeaways for Individuals

For individuals, the Budget brings a mixture of tax freezes and future increases:

• Income Tax & Allowances: The personal allowance (£12,570) and tax bands remain frozen until 2031. This prolonged freeze means more taxpayers may drift into higher tax brackets over time.
• Property & Savings Income: From April 2027, property income tax rates rise to 22% (basic), 42% (higher), and 47% (additional). Savings income will follow suit.
• Dividend Tax: From April 2026, dividend tax rates increase by 2 percentage points for basic and higher rate taxpayers, but no change for those paying additional rates.
• Pensions: Annual and lump sum allowances remain unchanged but, from April 2029, NICs will apply to salary sacrifice pension contributions above £2,000.
• Cost-of-Living Relief: Energy bills will fall by an average of £150 annually, regulated rail fares are frozen, and the two-child benefit cap is scrapped—measures aimed at easing household budgets.

While these changes provide short-term relief, the extended tax band freezes and upcoming rate increases mean individuals should plan for higher effective tax burdens in the coming years.

Autumn Budget Statement: Key Impacts on Business

Businesses face a steady tax environment but with notable compliance and incentive changes:

• Corporation Tax: Rates remain at 25% for large companies and 19% for small profits.
• Capital Allowances: A new 40% first-year allowance launches in January 2026, particularly useful for large partnerships, alongside a reduced writing-down rate of 14%.
• Employment NIC Costs: Employer NIC thresholds stay frozen at £5,000 until 2031. The Employment Allowance remains at £10,500, and relief for hiring veterans extends to 2028.
• Payroll Reporting: Mandatory reporting of benefits in kind via payroll begins April 2027.
• Company Cars & EVs: Benefit-in-kind rates for low-emission vehicles rise gradually, with transitional easements for plug-in hybrids until 2028.
• VAT & Compliance: VAT registration threshold stays at £90,000, but mandatory e-invoicing for VAT will apply from April 2029.

These measures encourage investment through enhanced allowances while tightening compliance requirements, signalling the government’s intent to modernize tax administration and maintain revenue stability.

Planning for 2026

The 2025 Autumn Budget Statement reflects a careful balancing act: raising revenue through tax freezes and future increases while offering targeted relief to households and incentives for businesses.

For individuals, planning ahead for higher tax burdens may be advantageous, while businesses should prepare for compliance changes and seize opportunities for investment relief. As always, staying informed and proactive will be key to navigating these changes successfully. If you have any questions about your circumstances, you can contact Shorts for a free consultation.